Modernising the Tax System: Simplification!?

In January 2024 the Government announced a package of measures that supports its ambition to simplify and modernise the tax system. These include the following:

Enhancing the non-reimbursed expenses service

Each year, HMRC receives 1.1m claims for tax relief from employees on their expenses. These claims are submitted through existing online services or via digital/paper forms, resulting in some claims being manually processed.

To simplify the process for employees and HMRC, the Government is designing a new, online service for employees to claim tax relief on all of their expenses in one place, meaning employees will get relief sooner. HMRC will provide further details in later this year.

Mandating the payrolling of benefit-in-kind

The Government will mandate the reporting and paying of income tax and Class 1A NIC on benefits via payroll software from April 2026, building on the progress already made on the government’s ambition to fully digitalise the reporting of benefits in kind.

HMRC state that:

This measure will reduce administrative burdens for thousands of employers and HMRC by simplifying and digitising the process of reporting and paying tax on all employment benefits. It will remove the need for 4 million end of year returns to be submitted to HMRC.

Amending the parents’ NI credit (Child Benefit)

The government will legislate to introduce a route for people to apply for NI credits for parents and carers for tax years where they have not claimed Child Benefit, to ensure that people do not miss out on their State Pension entitlement. The credit will add qualifying years of NI where eligible which will support future State Pension eligibility.

Individuals will be able to claim this credit from April 2026 and the eligibility for the credit will be closely based on Child Benefit eligibility criteria. Transitional arrangements will ensure those affected since 2013 are still able to claim. Going forward, applications will be available for six years following the relevant tax year.

How can Mercia help?

Mercia offers a range of practical training courses providing delegates with essential updates in this area, including:

Personal and Employment Tax Update

Payroll and Employment Taxes - Essential Update